Jubilant Pharmova Receives Rs 105.5 Crore GST Demand Notice

Tax Demand: Rs 105.5 crore (including penalty).
Relevant Period: Financial Years 2020-21 and 2021-22.

Reader Takeaway: Management firmly denies the tax liability, citing a strong legal position and expecting zero operational impact.

What just happened

Jubilant Pharmova Limited disclosed that its wholly-owned subsidiary, Jubilant Generics Limited, received a Show Cause Notice (SCN) from the Joint Commissioner, CGST Division, Roorkee. The authorities are questioning the eligibility of IGST refunds claimed by the company for the financial years 2020-21 and 2021-22. The dispute centers on the simultaneous use of IGST refunds under Rule 96 and benefits under the Advance Authorisation scheme, which the tax department alleges violates Rule 96(10) of the CGST Rules, 2017.

The demand breakdown

The total demand aggregates to Rs 105.5 crore. This comprises a tax component of Rs 52.75 crore and an equivalent penalty of Rs 52.75 crore. Additionally, the notice mentions interest charges, though the specific amount has not yet been quantified by the tax authorities.

Management response

Jubilant Pharmova has officially contested the notice, categorizing the demand as "factually and legally incorrect" and "bad in law." The company asserts that the tax authorities failed to conduct a proper examination of facts or physical verification before issuing the notice. The management has confirmed that it is preparing a detailed response to be filed before the Joint Commissioner and maintains that the company has a strong case that will ultimately prevail.

Risks to watch

While the company currently anticipates no material financial or operational impact, any adverse ruling during the adjudication process could force the company to recognize a liability or seek further legal recourse. Investors should track future updates on the submission of the company's reply and any subsequent hearings held by the CGST Division in Roorkee.